IS THE POTENTIAL VALUE OF THE MARKET FOR SMART LOCKS IN 2023
The market for ‘smart locks’ should be worth $2.67 billion by 2023, double the $1.28 billion it totalled in 2017, according to a recent report from Dublin-based Research & Markets. This market is in fact being shaped by twin, but opposing, trends. On the one hand consumers who are worried about security and wish to have greater control over their front door are interested in these products. On the other, doubts about how far these locks can be trusted and the fear of seeing them hacked into is slowing market growth. Security issues seem to be both obstacle and driver! For some weeks now, this business has been under the spotlight due to the arrival of a tech giant among its ranks when Amazon launched Key, a connected lock with integrated camera. On sale since 8 November, this tool is designed to help users receive home deliveries, saving time and ensuring that parcels are not stolen or damaged. But are there other reasons behind the service? What are Amazon’s real intentions in this field?
Opening the front door to developing at-home services?
The purpose of a door is to prevent undesirables gaining access to a place while admitting people who are expected or entitled to enter. Smart locks help them to do the job efficiently. KeyBot, a startup exhibiting at TechCrunch Disrupt 2017, August Home and Gate Labs, all have solutions in this field. KeyBot is the most recent arrival. Its services are designed for people who let out their apartments. Visitors can communicate directly with the bot, which will tell them exactly when and how to enter the place they wish to visit. San Francisco-based Gate Labs generates a unique code so that occasional visitors can enter and the app films everyone who comes into contact with the system. August Home, a market leader whose owners L’Atelier met up with at the Web Summit a few years ago, sells a similar system, with an optional camera. The common factor with all these systems is that they make it easier to use home-based services.
You no longer have to leave a second set of keys in the flower pot or under the mat, or with your cleaning lady. Your dog-walker, the people who feed your cat, drop off your freshly-ironed laundry and deliver your dinner can all now get into your home whenever necessary, on-demand and under the watchful eyes of those who live there, even though they may be out at the time.
Meanwhile, Amazon decided to create its own smart lock for its Prime service customers. Over the next few months, in addition to its delivery service, Amazon will start offering over a thousand services for the home, such as cleaning and pet-sitting, via Amazon Home Services. But why has the e-commerce giant taken this path rather than going the partnership route – such as the deal Walmart signed up to with August on 21 September to enable fresh food deliveries to be made right into the customer’s refrigerator? What’s the reason behind Jeff Bezos’ strategy? How far will his company go in developing in-home delivery services? Or is this really about penetrating deeper into the smart home market? Alessandro Promutico, CEO L’Atelier BNP Paribas North America, see several scenarios.
CEO L'Atelier BNP Paribas
When you give the ‘keys’ of your house to a company, trust levels are so high that you’re likely to remain a loyal customer.
The first scenario stems from Amazon’s desire to get inside its customers’ homes in order to ensure they remain captive customers. Alessandro Promutico points out: “With Alexa, Amazon monitors the inside of your house; with Key it monitors access to your house. Amazon has overtaken Google as regards the number of online product searches and clearly intends to stay ahead. With Alexa the company ensures that users who turn to their smart personal assistant go first and foremost via Amazon to make their purchases.” In the same vein, Key informs Amazon who has had access to the front door and when. “When you give the ‘keys’ of your house to a company, trust levels are so high that you’re likely to remain a loyal customer,” argues the L’Atelier BNP Paribas North America CEO, adding: “The Internet giant is betting on the fact that customers are so concerned about their packages that they would rather let someone they don’t know bring them right into their home rather than risk them being stolen from the doorstep. This is a measure of the level of trust among their most valuable customers.” Siddharth Vanchinathan, co-founder and COO of strategic design studio Propelland, which has joined forces with smart padlock startup BoxLock, agrees that this is an experiment, arguing: “Amazon is betting on turning the home into a basis for interaction with its customers, who will then no longer have to go on to the Internet. The company wants to provide them with a seamless experience, like Amazon Go (Editor’s note: a store where customers can purchase goods without having to go through a checkout).” Having earned $2.4 billion net profit in 2016, Amazon can afford to experiment and take a few risks. Alessandro Promutico believes that Amazon has launched Key not simply to enhance the customer experience but to solve a logistics issue. “Everyone wants their orders to be delivered outside working hours so that they can be at home to receive them. So the windows of opportunity for delivery are few and far between. Outside the slots at the beginning and end of the day no-one is there to receive the goods, so there is a risk that they might be stolen or that the delivery company will have to come back later. With Key, Amazon is optimising the delivery process and the use of its delivery fleet. If packages can be delivered throughout the day, there’s no longer any delivery ‘peak time’.” Consumers should find this a highly useful option, though today most remain doubtful.
Consumers remain sceptical
The first online feedback would seem to indicate some distrust on the part of potential users. Jeff Bezos’ firm has however taken great care to ensure maximum security for the home access process, so that not just any courier can obtain access to an Amazon customer’s home. When a delivery driver arrives at the door and requests entry, Amazon checks first of all that the right person has arrived at the right address at the scheduled time. The e-commerce giant then sends an encrypted message to authorise access, which automatically activates a camera, which starts filming just before the door is unlocked. This enables the owner to follow what is happening directly on his/her smartphone. However, all these precautions do not appear to have won over Internet users yet. Many have made negative comments, especially on the social networks. The reactions to the official YouTube video watched more than a billion times also tilted on average towards a negative opinion: while seven thousand people reacted positively, thirteen thousand said they did not like what they saw. There have been many articles in the press illustrating just how wary Americans are of opening their door to a courier. A poll conducted by SurveyMonkey on behalf of Recode found that 58% of Amazon Prime subscribers stated they would not buy the Key product while only 5% said they really wanted it.
Another survey carried out by US online survey and market research company Morning Consult found that 68% of all American adults felt uncomfortable about granting couriers access to their homes. The survey highlights the generation gap on this issue. The younger the respondent, the more comfortable they were with this new way of doing things. However, 52% of 18- to-29 year olds polled said it was unlikely they would use this kind of innovation. Amazon’s smart lock actually raises a lot of questions, including law enforcement and privacy issues. Would the company be forced to pass on a customer’s private information if the police asked for it? There also appear to be security risks. According to an article on the Wired website, the camera can be hacked easily. Does this mean Amazon is running a real reputational risk here? Siddharth Vanchinathan answers cautiously: “For the moment, people are opposed to the concept, but no real damage has been caused yet. The day that happens – because one day it will happen, a courier will get into someone’s home using Amazon Key and steal or break something – it will be very detrimental to their reputation. Even if 10,000 deliveries go perfectly well, the one that goes wrong will attract all the attention.”
Evangelising in the market
Cofounder and COO
The best way of penetrating the market and raising awareness of the product would be to work directly with the construction industry so that the technology is integrated into the buildings
Alessandro Promutico underlines that Amazon encountered similar problems when it launched its voice-control Echo range. “Alexa was also regarded as an invasion of privacy and the firm will have to get beyond that this time as well. This time the situation is a bit more delicate however. Alexa can be turned off from time to time when sensitive topics are being discussed, but it’s Amazon Key’s basic purpose that’s turning the customer off.” The L’Atelier BNP Paribas North America CEO also points out that people with malicious intent will always find a way of entering a customer’s apartment. Users might well change their minds if they find that the benefits of Amazon Key outweigh any risks. Amazon is in any case raising awareness in the market by highlighting that such delivery solutions do exist. At the moment the use of smart locks may not be very widespread, but people are definitely getting interested in them. San Francisco based August Home is currently being acquired by Assa Abloy, a Swedish company that makes and sells traditional locks and other security devices.
Propelland COO Vanchinathan sees this as an interesting venture, as he believes that “the best way of penetrating the market and raising awareness of the product would be to work directly with the construction industry so that the technology is integrated into the buildings".
Smart locks help avoid the feeling of intrusion
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The startup partner has however come up with a different strategy to address the problem of packages being stolen. BoxLock, which has already doubled the amount it was aiming to raise on its Kickstarter crowdfunding campaign, has developed a smart lock for a trunk installed just outside the front door of your home. The prototype is currently in beta testing in Atlanta, Georgia with around twenty users. “We’re trying to work out whether it’s instinctive or whether the instructions are clear enough for the delivery van driver to leave the packages,” explains Siddharth Vanchinathan. The app that goes with the lock registers the tracking numbers of the orders received by email and all the courier has to do to open the trunk is scan the barcode of the ordered article. Says Vanchinathan: “Up to now feedback from the delivery drivers has been very positive. One of the reasons that they approve of the initiative is that they can be penalised if packages don’t arrive at their destination. Firms have insurance to cover this, but it costs them a huge amount of money.”
At the moment people living in apartments cannot use the BoxLock solution, but the fledgling company is looking seriously at how they might. “It means that couriers don’t have to go inside your home. People find this too intrusive, and the majority are still highly sceptical,” stresses the Propelland COO. As regards Amazon’s reported plan to deliver items inside the boot of customers’ cars, he argues: “That’s even more difficult. You need to know where the car’s parked. If the customer isn’t at home, it’s very likely that the car isn’t either. This is not as reliable as the permanently-placed trunk BoxLock uses.” However, the technology used to open and close the door of your house could certainly be used for cars. Unikey Technologies, which tailors its connected lock product development to specific partnerships, is aiming in the long term to enable people to use their smartphones to unlock both their front doors and the door of their car – in exactly the same way as Bodega connected vending machines work on the basis of an app to open the machine’s window, enable self-service and then shut the machine again.
Restoring the human touch so as to encourage acceptance of the technology
We should know our delivery drivers in the same way as some people still know their postman.
“If it were the usual delivery person entering a person’s home that would probably be all right because the occupant would know him/her, but if it’s someone else, that remains a barrier,” says Siddharth Vanchinathan. He has perhaps put his finger on the solution here: should companies try to restore the human touch to delivery services? Alessandro Promutico puts forward an alternative scenario. “Just as you trust your cleaning lady, who also has a backup person – you trust them because you’ve met them – customers would be more likely to trust a delivery driver they knew. We should know our couriers in the same way as we know our postman. Amazon could ask its delivery drivers to introduce themselves (even on camera) and establish a relationship with a given customer so as to make interaction easier.” This is an efficient way of building trust, but one which is perhaps more difficult to implement in the United States, where staff turnover is high. We can just hope, for Amazon’s sake, that their customers will put the same trust in the brand as they do in a person they actually know. After product logistics, and now service logistics, will the company founded by the world’s richest man one day decide to get into ‘people logistics’?